The Worst Business Decisions of All Time

Kmart’s big mistake in the mid-to-late 1990s was to try to compete with Walmart on price. Walmart had a supply chain system known as “just-in-time” inventory, which allowed the retailer to restock shelves efficiently. Kmart failed to implement a similar system, which meant consumers became frustrated when stores ran out of goods. Between June 1998 and June 2000, Walmart’s stock price rose 82% as Kmart’s fell 63%. While new management at the turn of the decade worked to improve efficiency, the company filed for bankruptcy in 2002 and shut hundreds of stores. Kmart merged with Sears Roebuck in 2005.

By the time car manufacturer American Motors was absorbed by Chrysler in 1987, the company had been on a decline for more than 20 years. American first began to report losses in the mid 1960s. At the time, it failed in its efforts to compete with General Motors and Ford Motor Co. (NYSE: F) by expanding into large cars that could generate better profits per vehicle. Despite the losses, it was able to stay afloat through the next decade after it bought the Jeep brand in 1970 from Kaiser. But a weak economy hurt Jeep sales and began to restrict the company’s cash flow in the late 1970s. Additionally, overseas automakers began to pose a major threat. Japanese auto companies, which began to heavily market small cars in America, manufactured them in Japan where auto worker wages were much lower than in the United States. All American car companies, including American Motors, had long-standing labor agreements in place that dictated relatively higher salaries in the 1980s. American Motors lost money in all but one of the years between 1980 and 1986.

Consumer electronics manufacturer RCA was highly regarded through most of its history as particularly innovative — the company was the first to sell electronic televisions to a wide market. Yet, from the mid 1960s and into the 1970s, the company began to diversify beyond the scope of its traditional business. Its expansion was so rapid and so far flung that the company has become unmanageable. It bought a motley collection of companies, including publisher Random House in 1965, car rental company Hertz in 1967 and frozen food maker Banquet in 1970. The company even tried to make a push into IBM’s territory with mainframe computers. While it diversified, the company scaled back research and development spending on its core product lines. When these acquisitions proved unsuccessful, RCA announced that it would return to focus on its traditional products, which mostly consisted of color televisions. By then, however, the company had to compete with Asian manufacturers that made cheaper consumer electronics goods. The company was eventually sold to General Electric Co. (NYSE: GE) in 1986.

Eastman Kodak developed the digital camera in 1975 but did not invest in the technology for fear it would undercut sales of its film business — Kodak’s executives did not foresee the eventual decline of film. Only when film’s popularity began to wane in the mid-1990s in favor of digital photography did the company push into the digital market. But competitors such as Fuji and Sony entered the market faster and Kodak was never able to fully capitalize on the product it actually invented. By 2001, the company was in second-place to Sony in the digital camera market, but it lost $60 on every camera sold. By 2010, it ranked sixth in the digital camera space, which itself began to dwindle with the advent of smartphones and tablets. Eastman Kodak shares peaked in 1997 at more than $94 per share, proof that it often takes a number of years for poor decisions to destroy huge corporations. By 2011, the stock had dropped to 65 cents per share, and the company filed for bankruptcy in December of that year. Kodak, always one the Fortune 500 companies, might not even make the 2013 list.